Financing In-Transit Inventory: Perfecting Security Interests and Resolving Priority Disputes

Lender Due Diligence, Bankruptcy Risks, Intercreditor Agreements With Third Parties With Competing Interests in the Goods

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, November 24, 2015

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will offer guidelines for counsel advising lenders dealing with in-transit inventory financing. The panelists will share their experiences on the key pitfalls presented by financing in-transit inventory and outline strategies for perfecting security interests, enforcing remedies and dealing with other parties with competing claims to the goods.

Description

Lenders in asset-based loans often lend against the security of a borrower’s inventory, including inventory in transit to the borrower from a foreign supplier, as part of a borrowing base under a revolving line of credit.

There are unique legal risks in financing in-transit inventory, including insuring the goods; perfecting the lender’s security interest in the inventory and documents of title; and resolving claims to the inventory by a bankruptcy trustee, unpaid seller, carrier of the goods, NVOCC and customs broker.

Counsel for lenders must work to ensure both that in-transit financings are properly perfected and that the lender is protected against inventory claims by third parties. Utilization of custom broker and other agreements is an effective way to mitigate against claims of third parties.

Listen as our panel of commercial finance attorneys discusses how to advise lenders regarding in-transit inventory financings. The panelists will explain the key legal pitfalls in financing in-transit inventory and suggest strategies for perfecting security interests, enforcing remedies, and dealing with other parties with competing claims to the goods.

READ MORE

Outline

  1. Common legal issues arising when financing in-transit inventory
    1. Prior liens of unpaid foreign sellers
    2. Stoppage of goods in transit and reclamation
    3. Effect of title retention by the seller
    4. Risks in the use of negotiable bills of lading
    5. Effect of bankruptcy of borrower
  2. Perfecting a security interest in goods
  3. Practical considerations when structuring the financing transaction
    1. Cargo insurance
    2. Custom broker agreements
    3. Agreements with carriers and sellers
    4. Agreements with NVOCC
    5. Intercreditor agreements with other parties with interests in the goods
    6. Indemnification

Benefits

The panel will review these and other key issues:

  • What are the legal risks to secured lenders participating in in-transit inventory financings when a borrower faces insolvency?
  • What steps should lenders take to properly perfect in-transit inventory financings?
  • What are best practices for lenders’ counsel to protect against third-party claims to in-transit inventory?
  • How can intercreditor agreements be used to neutralize claims of third parties with competing interests in the goods?

Faculty

Dobbs, Edward
C. Edward Dobbs

Partner
Parker Hudson Rainer & Dobbs

Mr. Dobbs’ practice for more than 41 years has been concentrated in documenting and closing commercial loans for...  |  Read More

Hemmendinger, Thomas
Thomas S. Hemmendinger

Of Counsel
Brennan Recupero Cascione Scungio & McAllister

Mr. Hemmendinger represents businesses and financial institutions in commercial finance, litigation, bankruptcy, and...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

$297

Download

$297